TYM Social Performance Assessment Completed


One of the main services of PFTAS is focused on the promotion of social performance management (SPM) as a tool for microfinance institutions. Part of these technical advisory services is the conduct of social performance assessment to determine if the institution has translated its social mission into operational policies and actual practices. In Vietnam, PFTAS has conducted a series of assessment to four microfinance institutions – Dien Bien Phu, Ha Thinh, Thanh Hoa, and World Vision MFU – as part of the Financial Inclusion project funded by EU and AFD which ended last January.

This year, PFTAS provided the assessment services to the TINH THUONG ONE MEMBER LIMITED LIABILITY (TYM) Microfinance Institution. TYM started as a project of the Vietnam Women’s Union (VWU) tracing its humble roots in 1992 in Minh Phu commune, Soc Son, Hanoi, where the first 20 women were provided with financial services. In 1998, it was made as an independent department of the VWU and an income-generating unit in 2006. Finally, it was registered and licensed as a microfinance institution in August 2010. At present, TYM is operating in several provinces with a loan portfolio of $23,244,130.00 serving 84,090 clients.  Average loan size remains low at $276.42, reflecting the low-income level of the borrowers. Being one of the only two licensed microfinance institution in Vietnam, it has the burden of covering more areas and reaching out to more clients and at the same time lead the way for the other emerging institutions in the country.


The CERISE Social Performance Indicators (SPI) was used in the TYM assessment. The tool focused on four main dimensions to evaluate the institution’s adherence to social performance practices. The dimensions are: targeting and outreach; product and services; benefits to clients; and social responsibility. The tool was administered to various levels within the institution, from the decision makers, the management team and to the field staff in the branches. Clients were also included in the diagnostic exercise. The results of the assessment will provide a picture of the institution and will be the basis for adjustments and realignment.

The results showed that the institution is clear with its mandate of serving the poor especially disadvantaged women. It has not veered away from their mission and has been consistent since its formation 21 years ago. Being the first to be licensed and the only one operating north of the country can be considered as one of the main strengths of the institution. The wide range of products and services and the big operational network that ensures outreach even to the remotest areas of the country contributes to its effectiveness as a financial services provider to the poor.

PFTAS advanced in SPM Technical Assistance to its partners


The Social Performance Task Force (SPTF) just released documents from the concluded annual meeting of the task force this year in Panama. Reviewing the issues raised and discussed at the meeting, we at PFTAS can claim that we are advanced in our approach in SPM mainstreaming. We not only shared the concepts of SPM but have addressed the issues raised in the annual meeting. We have conducted assessment, facilitated strategic planning to integrate SPM in the long-term plans and have assisted our partners in initiating the mainstreaming of changes that they have identified and prioritized. This forward looking stance is our comparative edge over other consulting firms.

I would like to reprint the message of the SPTF Secretariat verbatim on the main issues discussed during the annual meeting:

1. We need a new approach to strategic planning: To many people’s surprise given the prevalence of strategic planning, it turns out that this is still an area of weakness in our industry. Two key themes arise here. Firstly, the need to integrate SPM into the very fabric of strategic planning. SPM isn’t a line item in the strategic plan – it IS the strategic plan. Unless this happens, SPM will always exist in parallel with in the organization, and we’ll always be fighting to operationalize it. The second theme is this: death to the five-year plan. In the context of rapidly changing institutions and markets, the plan should not be set in stone for five years, but a living breathing document. To facilitate this, managers need to build in time on a regular basis to take a pause from day-to-day operations and focus instead on critical self-reflection and the strategic vision.

2. We need a new approach to change management: The Universal Standards for SPM set out WHAT we need to change within our institutions to achieve our social mission, but MFIs also need guidance on HOW to manage the organizational change process. This is a real skill gap among organizations (which also relates to the gap in strategic vision among leaders). Two key ideas emerged during the meeting: organizations need to consider whether an SPM Champion and an SPM Board Committee are appropriate to their individual context. While having these functions offers visibility and accountability to the SPM agenda, they also bring the risk of marginalizing or “silo”-ing” it.

3. We need to unpack the issue of balanced returns: A range of stakeholder interests come into play when talking about the interaction between prices and profits. Firstly, we need to focus at the role of investors in terms of driving expectations. Secondly, we need to understand client preferences and outcomes. Thirdly, we need to ensure that MFIs are deliberate and skilled in the challenge of setting prices – because evidence suggests that it is not an automatic trade-off.

4. Harmonization is key: In the coming years, the SPTF will be making a big push towards harmonizing data collection and reporting processes, and aligning them to the Universal Standards. Assessors and auditors have also worked to harmonize their tools to the Universal Standards. At an institutional level, the Universal Standards can and should be used to guide and shape the work of external technical support that MFIs receive, to ensure that efforts to strengthen institutional systems and processes support rather than hinder Universal Standards compliance.
Where SPM is fully integrated into the strategic planning process, this can be facilitated.

5. We need to understand the linkages between Universal Standards compliance and improved client outcomes: This issue came up in several sessions – notably the balancing returns discussion – which absolutely need to be grounded within an understanding of what’s happening at the client level.

6. MFIs need practical guidance each step of the way: Again, the need for practical guidance to how to implement the Universal Standards came up as a strong message from members. Important here to reiterate the commitment of the SPTF to delivering on this promise and highlight progress made to date.

PFTAS will continue to provide quality and relevant technical assistance to its partners consistent with industry and global standards.


ImageOne of the main problems for researchers is the generating the right data that they can use.  Since you have a hypothesis before you start, the design of the research is towards the validation or the rejection of the hypothesis.  There are times when researchers  are becoming too hard (too irritating!) on the respondents or the  participants to focus group discussions to the point where the respondents would just  give answers they thought would be the “right” answer that the researchers would like   to hear. In the end we may have the data but it may be useless since it was squeezed out.

This brings us to the point that in market research, we have to have a relaxed atmosphere where respondents and   researchers can share freely.  Researchers are supposed to be facilitators who will coach respondents to bring out what is really in their minds.  Respondents on the other hand will react to how they are being guided and cued in their sharing.

Some tips in doing interviews and focus group discussions:

  1. Be relaxed. Smile a lot to convey you’re a friend and not an interrogator.
  2. Ask questions slowly so that the participants can hear it clearly. Allow sometime for them to think and organize their answers.
  3. Listen. That means active listening and getting the essence of what the participants are saying.
  4. Ask probing questions to confirm what you hear, to clarify what you do not understand or you want more details or additional information.
  5. Always thank the participants after each interview or discussion.

Transforming Development Organizations into Microfinance Operators

ImageMicrofinance has been touted as one of the most effective tools in providing financial access to the poor, and helping them move out of poverty.  In most developing countries, non-government organizations providing microfinance services are considered informal service providers. They are not regulated and government agencies in most cases acquiesced and allow them to operate in support of poverty alleviation initiatives.  One main concern is the fact that most NGOs who are into microfinance lack the needed competencies in financial management.  This is explained by the fact that most NGOs are more focused and involved in development issues. Minimalist organizations that focus on one main service, like microfinance, are quite few.

Recent developments like the growing number of MFIs and the emerging commercial investors willing to place money in microfinance are some of the factors that push for the formalization of the industry. Many countries were able to establish legal framework for MFIs to operate, motivating them to register and operate formally.  It is viewed that transformation will enhance the image of the MFI.  On the one hand, it will give visibility, higher reputation and client confidence for the MFI. On the other hand, MFIs should be able to enhance its governance, operating systems, recording and reporting mechanism to be able to comply with regulatory requirements.

Among the main issues expressed by MFIs against formal registration are the following:

  1. Minimal capacity to transform from informal to formal institution, especially in upgrading operating systems;
  2. High requirements to hurdle towards formalization, specially interest rate, reserve requirement, loan loss provisioning, etc.;
  3.  Cost of formalization may be beyond the capacity of the institution; and,
  4. Possibility of being subject to political pressure as a licensed institution.

In Southeast Asia, countries have varying levels of development. In Cambodia and the Philippines, the regulatory framework is advanced, giving favorable environment for MFIs to develop and grow, while in Vietnam, the regulatory framework is still being developed.

Clarifying Leadership, Governance and Management

For the past three months since May 2012, a series of seminars on leadership and governance were conducted for officers of microfinance institutions in Vietnam. The course was aimed at helping the participants clarify governance, leadership and management functions and be able to delineate roles of various positions in the structure of their institutions.

At the start of the seminar, most of the participants admitted during the discussions that the concepts of leadership, governance and management were confusing for them. The confusion usually stemmed from their practice of having positions with multiple functions. This practice was traced at the time when an organization, starting small, has to have people assuming multiple roles.  As the organization grows, the functions of these people became ingrained and cannot be segregated anymore.  Forcing the segregation would involve emotional and reputational concerns that may affect the smooth operation of the organization.  This apparent confusion was evident not only among the participants to the training but also to other microfinance institutions as well. It may even be true to other non-government organizations in the country. 

One of the sessions emphasized two main qualities inherent and distinct to a leader. The first is the ability to express and share a vision; and second, the ability to inspire the people to work towards the attainment of that vision. An exercise was done where each participant was asked to identify a person whom they think has the qualities of a leader, a sort of their model leader. The responses placed on top of the list Ho Chi Minh with four leaders considering him the ultimate model of a leader.  Following closely after Uncle Ho were responses pointing to the director of the MFI as the other model of leadership. These responses were mostly from the participants who are senior leaders of the MFIs.  The fact that MFIs in Vietnam are part of the Women’s Union explains the tendency to look at leaders of mass organizations as the epitome of leadership.  Steve Jobs, Mohamad Yunus and Jesus followed after Uncle Ho and the MFI leaders.

Governance on the other hand, refers to the decision-making structure of an institution. This function is usually the mandate of the board of directors of an institution. The board that represents the general assembly of a membership-based organization or the investors of a company provides policy directions to the management team of the institution.

Finally, the implementation of the policies approved by the board is given to the management team. The team is composed of the executive director and his team who makes sure that the policies are translated into work plan and budget designed to attain the long-term vision and the immediate operation of the institution.

The confusion is mostly in not knowing the difference between policy-making and implementation. There are instances where some members of the board who are more knowledgeable than the executive director tend to micro-manage and even do the implementation themselves. There are also instances where the executive director is dominant and the board has degenerated into a mere rubber stamp. The ideal situation therefore is the capacity of the people in the institution to maintain a balance between the two functions.     Image